Study Guide MGT 112
Five Competitive Forces That Shape Strategy – Porter
What ARE the five competitive forces that shape strategy (and
... [Show More] profitability)?
- Established rivals
- Savvy customers
- Powerful suppliers
- Aspiring entrants
- Substitute offerings
How does understanding these forces help a company?
By understanding how the five competitive forces, the company can develop a strategy for
enhancing the long term profits and it can provide a framework for anticipating and influencing
competition (and profitability) over time.
What is Strategy – Porter
How does strategy differ from operational effectiveness?
- Operational effectiveness means performing these activities better than rivals, but
strategy is doing different activities from rivals, or performing similar activities in different
ways/creating new demand.
What are three distinct sources that strategy emerges from?
- Serving few needs of many customers (Jiffy lube w/ auto lubricants)
- Serving broad needs of few customers (Trust w/ high wealth clients)
- Serving broad needs of many customers (Carmike cinemas in cities with a population
under 200,000)
- Creating a valuable and unique position, making trade-offs, creating strong fits
Reigniting Growth -Chris Zook and James Allen
Why do many successful companies eventually “stall-out?”
- The company’s business become too complex.
- “Internal dysfunction, not the lack of opportunity or unmatchable competitor capabilities,
was now the main barrier to continued growth”
- Certain attitudes like meeting consumers on the frontline and fostering a mindset for
responsibility for how resources are used and long term results are are common in
companies with continued growth
What causes the “stall out” and what are the symptoms of it?
- Stall out occurs when the growth engine that powered a company to success stops
working. Some symptoms is that the business has almost always become too complex,
most often owing to bureaucracy that slows the company’s metabolism, or internal
dysfunction that distorts information and hampers managers’ ability to make rapid
decisions and take swift action on them. This could include decision making process
becoming too democratic.
What are the proposed ways of overcoming the stall out?
- Rediscover insurgent mission
- Obsess over business’s front line
- Instill an owner’s mindset [Show Less]